Malawi Business Action Against Corruption

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case study Malawi

Business Case on Malawi Business Action Against Corruption

Draft for Discussion Purposes, Subject to Approval by Participating Organizations

Oonagh Fitzgerald64James Ngombe65

This business case was prepared in collaboration with Daisy Kambalameand Sean de Cleene of the African Institute for Corporate Citizenship ofMalawi (AICC), and with the support of Ralph Hamann of the University ofSouth Africa (UNISA) and Birgit Errath of the UN Global Compact.

Collective Business Action Against Corruption in Malawi

Typing his last revisions to the speech he would be giving to a Llongwe

merchants association later in the week, Sean de Cleenes brow furrowedinvoluntarily. There was nothing he enjoyed more than proudly describinghis initiative to potential new partners, yet he was starting to feel troubledby the slow pace of adoption of his beloved Code. He was even starting tolose sleep about managing the delicate relationship with government, andwaiting every day for the news that the government would be endorsingthe Code.

As the new President of the African Institute for Corporate Citizenship inMalawi, some fifteen months ago, Sean had successfully orchestrated the

launch of a major initiative to combat corruption in Malawi by building amulti-stakeholder, cross-sectoral partnership with leaders in business,government and civil society. While he understood the initiative neededthe approbation of government and engagement of a broad range ofstakeholders, Sean had been adamant that at its core this needed to be acollective business initiative, led, motivated and organized by Malawibusiness. He believed it was critical for the business community to takeownership of the initiative and start exerting peer pressure to broaden thecommitment.

In her office just down the hall Daisy Kambalame was hurriedly piecingtogether materials she would need for yet another international meetingabout anti-corruption measures. As she worked she found herselfcomparing ironically the enthusiasm she knew from experience wouldgreet her presentation on the international stage, and the cautious, polite,reaction she would get when she spoke about the same initiative backhere in Malawi. Still, she knew it was all a matter of time and persistence.By cultivating the support of key donor groups like SIDA-Norad andinternational organizations like the United Nations Global Compact sheknew she was bolstering the legitimacy of Business Action Against

64 B.F.A., LL.B., LL.M., S.J.D., E.M.B.A. (Candidate), Member of Law Society of Upper Canada since 1983.65 Ph.D., Managing Director, Heinemann Agent, Blantyre. Malawi.


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Corruption with her own government and with the big multinationalspresent in the country. Once these key supporters and a few major localcompanies were on side, the rest of the Malawi business community could

be persuaded to sign on to the Code.

Before closing down her computer Daisy typed out a quick email responseto the Canadian researcher studying their initiative,

[O]ne of the issues that I have found most challenging but in the end helped in

influencing the progress that we have made is the issue of creating partnerships.I think the success of implementing the principles will also be dependent onunderstanding some of the issues that arise in establishing partnerships.66

Having overseen and guided the collective drafting of the Business Code ofConduct for Combating Corruption in Malawi, Seans main mission now

was to see it embraced by the industry and business sector. He wasprivately frustrated by the delays in obtaining endorsement of the Code bygovernment authorities, for he longed to see its adoption by the publicsector as this would provide tremendous leverage in encouraging theprivate sector to follow suit. Sean worried that until the governmentcame out firmly in favour of the Code there was a risk it might besidelined by other political priorities or pressures. With exasperation hewondered how the ambitious action plan articulated at the 2005 LeadersForum could ever be realized if a key building block like this Code washaving such difficulty getting established.

Impetus for Reform

Corruption had been overwhelming Malawi in recent years, such that international and

foreign donors and businesses were increasingly reluctant to invest in this small southernAfrican country, leaving citizens to face a bleak and impoverished future. 67 All sectors ofsociety had come to the realization that non action in the face of widespread corruptionwas not an option. Public and private sector and civil society shared a common desire toposition and enable Malawi to achieve its Millennium Development Goals by improvingthe stability, reliability, and transparency of its investment climate.

The negative effects of corruption were readily apparent but few were willing to abstain

while others continue to reap personal gain from corrupt practices. Multi-stakeholdernegotiations seeking to bind all participants to collective action to eliminate corruptionseemed to provide a possible means of systematic and concerted attack on the problem

(See Appendices I and II). Thus Sean de Cleene and Daisy Kambalame of the AICC setabout creating a cross-societal coalition, involving government, private business, civilsociety, donor agencies and the media, to tackle the corruption problem and implement

the 10th Principle of the UN Global Compact in Malawi.68

66 Daisy Kambalame, the African Institute of Corporate Citizenship (AICC).67

Corruption was seen as a major impediment to achieving the Millennium Development Goals. Malawi slidfrom 42ndin 2000 to 97th

in 2005 on the Transparency International Corruption Perception Index.

68 United Nations Global Compact Principle10, Businesses should work against corruption in all its forms,including extortion and bribery.


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2005: Preparing to take Collective Action

In setting out to tackle a systemic, country-wide issue like corruption through consensual

negotiation, Sean and Daisy had realized they might face many kinds of difficulty. Itwould be difficult to reconcile legal formality including specific legal prohibitions, legalrights and litigation positions with the need for cooperation, compliance discussion and

informal information exchange to better understand the problem. It would take skill andpatience to de-escalate self-righteous, winner-take-all attitudes, combativeness anddefensiveness. It would not be easy to reconcile past, current and future business andlegal risks when long-entrenched, lax business practices are replaced by strict codes of

conduct. It would be challenging to determine how to cooperate with competitors inethics partnerships without losing competitive position. It would be a challenge toachieve the right balance between procedural perfection and common-sense solutionsthat can be readily implemented and applied, and it would be critical to ensure thatparticipants were adequately trained to apply the new rules.69

They also anticipated that there might be difficulties in managing political pressures and

political opportunities, and in maintaining momentum over the long term. Because majorinstances of corruption often involve public procurement, it was almost inevitable thatthe fight against corruption would become politicized.70 With the Presidents anti-corruption campaign being implicated in his falling out with his former party, his actionson corruption were already being challenged by his opponents as politically motivated.They knew it would be important to keep moving forward on several fronts, buildcredibility and overcome whatever setbacks might occur.

With so many interests and risks at stake, it was critical to develop an effective multi-stakeholder negotiation process to break the impasse and create cross-societal coalitionsto find solutions that would produce system-wide reform. Such a process would allow

shared ownership of the anti-corruption issue so that it would not depend on the fortunesof any one person or any one sector of society but would be sustained by the deeds ofmany champions across Malawian society.

In order to harness commitment to the collective interest it was necessary to overcomeor at least re-frame self-interest in maintaining the status quo:

Although business managers increasingly recognize that corruption is a serious

business challenge, they may not always accept that they have a responsibility andkey role in changing practices that have become endemic. The dilemma is tobalance doing what is right against putting business operations at a competitivedisadvantage. business managers may perceive that promoting a change in

accepted local business practices could jeopardise their business interests. It isoften relatively easy to get business managers to acknowledge that it would bebeneficial to both them and their competitors if corruption were eliminated. What is

more difficult is for them to take the first steps to act together in combatingcorruption, for fear of losing out to each other.71

Corruption is by its very nature a team sport, characterized by inappropriate influencesoriginating from the private sector and undue benefits accruing to members of the public

69 Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes(1987. Basic Books) at 35-79.70 News reports suggest this is a serious problem, with competing allegations that prosecutions against senioropposition party members are politically motivated and that the President and members of his Cabinet should

also be the subject of corruption investigation but are protected by the Anti-Corruption Bureau.afrol News / The

Chronicle, 21 November 2005; Misanet / IRIN, 9 February 2006; afrol News / IRIN, 26 May 2006.71 Business Against Corruption: Case Studies and Examples. Implementation of the 10 th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006) at page 128.


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sector.72 Although on one level the solution to corruption is as easy as saying no, this isnot workable unless people could be assured that others would also say no, andsupport each other in a collective effort to put an end to corruption. In other words, Seanand Daisy recognized that business men and women might tend to view business as

usual as their best alternative to a negotiated agreement (BATNA).73 They might see thestatus quo as being better and easier than the difficult negotiating and trust-buildingrequired for collective action against corruption.

Nonetheless, it was also clear to them that collective approaches were well-suited totackling corruption and improving business standards: 74 In practice, collective actionwith other companies offers an effective way to create a level playing field on which to

compete and increases the impact on local business practices beyond the capacity of anyone company. Knowing that other companies in your sector or location are committed togood practice helps to build mutual confidence and the sustainability of changes inbehaviour.75

Sean understood that competing businesses shared a common interest in improving theirbusiness environment and working together they would have a greater impact inreducing corruption in their business sector. Acting together companies could tackle

locally relevant issues, set realisable targets, and more effectively integrate anti-corruption policies and codes into their own operations and their supply and distributionchains. Sean was aware that Transparency International, a non-governmental leader infighting corruption, had been using a coalition-building approach to bring relevant actors

together, from government, business, academia and the professions, the media, and thediversity of civil society organizations to combat corruption. Indeed, there is a growinginventory of models and best practices available to enrich implementation of the initial

action plan.76

Daisy was familiar with the Nigerian Convention on Business Integrity from here

international meetings (See Appendix III). The Nigerian model relied on consensualnegotiation processes to combat corruption. It was voluntary, involving pledge-making

by public and private sector participants, recognition and modelling of good conduct, andpeer pressure through a mutual accountability network. The Convention was adeclaration against corrupt business practices; it was not a legal document butrepresented a moral agreement between consenting parties. Its primary purpose was toencourage the establishment of a minimum standard for business integrity in Nigeria.

72 Business Against Corruption: Case Studies and Examples. Implementation of the 10 th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Case Study: Eastern Cape at page176.73 R. Fisher and W. Ury, Getting to Yes: Negotiating Agreement Without Giving In (1991, 2d ed. Penguin Books)at 98 et seq., originating the concept of BATNA best available alternative to negotiated agreement.74 Business Against Corruption: Case Studies and Examples. Implementation of the 10 th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Peter Brew and Jonas Moberg, Thepower of joining forces The case for collective action in fighting corruption at 133.

75 Business Against Corruption: Case Studies and Examples. Implementation of the 10 th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), The Power of Joining Forces at page128.76 Business Against Corruption: Case Studies and Examples. Implementation of the 10 th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Case Story: Integrity Pacts at page141: Transparency Internationals primary objective is to infuse transparency and accountability into the globalvalue system as generally recognized public norms. The Integrity Pact developed by TransparencyInternational provided a practical model of consensual negotiation. It consists of an agreement between agovernment department and a company bidding on a public sector procurement contract not to pay, offer,demand or accept bribes of any sort, or collude with competitors to obtain the contract, or while carrying it

out. Bidders would be required to disclose all commissions and similar expenses paid by them to anybody inconnection with the contract. Breach of the agreement would result in sanctions ranging from loss or denial ofcontract, forfeiture of the bid or performance bond and liability for damages, to blacklisting for future contractson the side of the bidders, and criminal or disciplinary action against employees of the Government. (at 134)


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Under the rules of the Convention a whistleblower was granted anonymity and couldpresent a complaint to a core group of Convention members who would then approachthe company in question asking it to appoint a senior level Ethics Counsellor to workthrough the issue with them and monitor compliance.

It takes time to build confidence amongst groups of business leaders who mayinitially be sceptical about what can be achieved and concerned at the implicationsof working with competitors and others outside their normal set of relationships.

Focusing on issues that have important current impacts on business and thecommunity and then conducting a series of individual and group meetings to explorethe opportunities and barriers to cooperation are essential steps leading to theformalisation of any initiative. These steps take time, but it is time well spent.

Having someone who has previously been a business executive to act as acoordinator may give participants the confidence required to ensure that a processgains momentum.77

2005: The Malawi Leaders Forum

The integrative negotiation process was started in earnest when the Sean and Daisy,through the AICCs Africa Corporate Sustainability Forum, facilitated a series of business-

sponsored round table discussions in partnership with the Malawi Global Compact. Ateach event some 20-30 leaders from business, government and civil society discussedissues related to the Global Compact and the role of business in progressing towardsachieving the Millennium Development Goals.

The first of these round table discussions was held in January 2005 focusing on the newlyintroduced 10th Principle on Corruption.78 Until then the private sector had not been

active in the fight against corruption despite governments publicly declared intention inthis respect, but this meeting produced agreement to hold a one-day Leaders Forum onBuilding Alliances to Eliminate Corruption. The Forum brought together leaders fromgovernment, the business sector, civil society, the media and donor organizations, andwas wholly funded by private sector organisations. Having private companies fund theForum was strategically significant because experience suggests that financialcontributors are always more likely to remain engaged, take a project seriously and

demand practical results.79

Experience also demonstrates that the political willto reduce corruption and to revive

honesty and integrity in Government contracting is a sine qua non for success.80 Thus itwas auspicious that the President of Malawi, Dr. Bingu Wa Mutharika, opened the event,

describing corruptionas a major burden to society substantially eroding the economicresources otherwise available for ensuring a countrys sustainable development, and

77Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Peter Brew and Jonas Moberg, Thepower of joining forces The case for collective action in fighting corruption at 132.

78 The second one was held to discuss the role of corporate governance in promoting MDGs the third and fourthround table discussions were on opportunity creation and sustainable development in the agriculture sector andthe development of a promotional campaign to this effect. Sponsorship for the round table discussions wasreceived from BP Malawi, Limbe Leaf Tobacco Company, Monsanto, Yara Malawi, Multi Choice and DuluxLimited. From Malawi Leaders Forum on Building Alliances to Eliminate Corruption Final Report 2005.79Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), The power of joining forces The case

for collective action in fighting corruption at 132.80 Business Against Corruption: Case Studies and Examples. Implementation of the 10 th United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Case Story: Integrity Pacts at page137.


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reiterating his commitment to fighting corruption. He commended the private sector forholding the event and for the active participation of a large number of company CEOs,and acknowledged the support of the international donor community in the fight againstcorruption. Pledging his assistance, the President encouraged participants to work

actively with partners from government and broader civil society to build powerfulalliances to effectively eliminate corruption in the country. The President thus helped toset the stage for successful negotiation by publicly committing to support a collectiveeffort, and signalling to the nation that a major societal shift was happening.

The other keynote speakers were also chosen as strong representatives of theirrespective constituencies, in anticipation of developing good channels of communication.

The Patron of the Malawi Global Compact, Dr Mathews Chikaonda, CEO of PressCorporation, highlighted the current governments leadership and the willingness ofbusiness to partner with government on this issue and urged concerted action to combatcorruption.81 Mr Banda, Deputy Director of the Anti Corruption Bureau (ACB) and Mr

Ishmael Wadi, Director of Public Prosecution, explained the prosecution process and

existing rules and systems designed to hold perpetrators of corruption accountable. Theyemphasized that the private sector could contribute to their efforts by providing

information on corrupt practices in government procurement. Mr Roderick Phiri, ChiefExecutive Officer (CEO) of SDV and a member of Malawi Global Compact Network, urgedgovernment and business leaders to form productive alliances and act as strong rolemodels in combating corruption.82 Mr. Fred Mzomwa, Deputy Director of Public

Procurement (DPP), described how the 2003 Procurement Act decentralised governmentprocurement to internal procurement committees for greater efficiency, but with the lackof capacity to support the new process, the DPP needed help from the private sector to

identify procurement irregularities.83 Minister for Trade and Private Sector Development,Dr Martin Kansichi, spoke of the destructive effects of corruption on property rights, therule of law and investment, and urged ongoing multi-sectoral cooperation to bring about

a comprehensive change in societal attitudes to corruption.

Issue identification at the Leaders Forum was wide-ranging, covering a variety ofperspectives and identifying many critical needs: training and consciousness-raising forall employees in government and the private sector; public communications campaignwith announced time-bound commitments; strengthening professional independence andprofessional discipline in the legal and judicial field; business to business peer review;

joint development of common standards and guidelines for the public and private sector;

establishment of an independent body to devise incentives, monitoring systems, andpromote best practices; learn from anti-corruption models tried successfully elsewhere;private sector support for the ACB; government to target bureaucratic bottlenecks thatengender corrupt practice (See Appendix IV).

After discussion of the challenges that currently existed in fighting corruption,participants at the Leaders Forum crafted a framework agreement, a common text to

which all provided input, as an initial action plan for progressing towards the eliminationof corruption. Their key recommendations were:

81 He urged business to implement systems to mainstream the fight against corruption as a core business issueby incorporating anti-corruption clauses into employment contracts of managers. He recommended setting upof an independent body to develop incentives to back a zero tolerance policy on corruption, particularly as itrelated to the supply chains of larger companies, state enterprise and government procurement.

82 He argued that businesses needed to agree on a strict code of conduct, supported by internal reporting

systems and improved transparency and accountability.83 In this respect Fred Mzomwa went on to say the establishment of an independentbusiness lead reporting body would be a positive and welcome step forward.


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For an independent taskforce to be established, which would drive the action planforward.

To review existing codes and the adoption or development of a code of conduct for

the private sector and state enterprise in Malawi to promote a zero toleranceapproach to corruption.

The initiating of an independent body that would build value around, or incentivise,a zero tolerance policy on corruption - particularly as it related to the supply chain

of larger companies, state enterprise and government procurement. This wouldinclude the application of a scorecard or rating model that companies would agreeto respect in terms of obtaining or providing goods or services. The NigerianConvention on Corruption model was highlighted as a potential model to be followed

if it was viewed to be appropriate in the Malawian context.

A recognition of the need to strengthen corporate governance practices of bothprivate and public sector businesses in Malawi.

The development of a system for publicising all major procurement contracts and

transparent processes for deciding on successful bids.

The formation of a government working group to highlight inefficiencies in thesystem that create loop holes for engaging in corrupt practices, and devise ways ofeliminating such inefficiencies.

For government to look to ratify the AU Convention on Corruption

For donors to provide greater support for multi-sector alliance building initiativesthat aim to eliminate corruption in the country. 84

Consensual negotiation involving the broad range of stakeholders provided a

methodology for discovering common interests, harnessing shared commitment, andbuilding and maintaining the required anti-corruption infrastructure. As all parties

depended on each other for the successful eradication of corruption they needed tonegotiate in a way that maximized the effectiveness of each party: developing theagenda collaboratively to ensure all could prepare adequately, sharing information toachieve a common understanding of the issues, working to achieve practical solutionsthat all sides could support, creating a web of interconnected commitments to ensure allsides were involved in and accountable for implementation.85 At the same time, it was

important to guard against the multi-stakeholder process becoming so large andunwieldy as to be incapable of taking decisive action.86

84 Final Report of the Malawi Leaders Forum on Building Alliances to Eliminate Corruption (7 June 2005).85 D. Ertel, Getting Past Yes: Negotiating as if Implementation Mattered (November 2004) Harvard BusinessReview 60 at 65.86

Business Against Corruption: Case Studies and Examples. Implementation of the 10th

United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Peter Brew and Jonas Moberg, Thepower of joining forces The case for collective action in fighting corruption at 131:

Through the involvement of a wide range of actors, companies, non-governmental organizations andGovernments, initiatives such as the United Nations Global Compact can quickly obtain a high degree oflegitimacy and authority. Other multistakeholder initiatives, such as the EITI [Extractive IndustriesTransparency Initiative], have come about because of the campaigning of non-governmental organizations.The Initiative created an important forum for businesses, non-governmental organizations andGovernments to come together to discuss issues of joint concern. A potential drawback withmultistakeholder initiatives is that they often grow rapidly and consequently may become cumbersome tomanage. Also, it may be difficult to turn aspirations into tangible action. As the number of participantsincreases, the early dynamism and confidence of the original smaller group of participants can bedissipated. On the other hand, business-led initiatives that are focused on solving specific businesschallenges can often be more results-driven, but they may not satisfy the expectations of otherstakeholders.

In practice, it is important for business-led initiatives to engage with and seek support from otherstakeholders. Governments and multilateral institutions can play an important role by promoting andfacilitating initiatives that are essentially voluntary for companies to adopt. Again, the EITI can serve as anexample.


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The facilitator role played by Sean, aided by Daisy, was particularly helpful in encou-raging dialogue between sectors of Malawi society and urging business to commit toimmediate and purposeful action towards eliminating corruption. Although they hadexpected to stay deeply involved in the initiative as it evolved, neither of them had

envisioned that they would have to coordinate the ant-corruption initiative for the long-term. In the days following the Leaders Forum, once the initial glow of their success haddimmed, they began to realize they would have little choice but to assume this role for awhile longer at least. Who else was there to coordinate and drive refinement ofundertakings and implementation of action plan commitments for the foreseeable future?

2006: Reviewing Progress after Fifteen Months

It was clear from the outset of the Malawi Business Action Against Corruption that itwould be a long-term project, requiring sustained engagement of the various sectors ofMalawian society. Sean and Daisy thus were left with the daunting task of channelling

the moment of shared commitment of the Leaders Forum into a long termimplementation plan. With little by way of human or financial resources to support theinitiative they began by setting up a working group of business, government and NGOrepresentatives to draft a code of business conduct. Twelve months later, the Business

Code of Conduct for Combating Corruption in Malawi (See Appendix V) had been drafted,and they were waiting for the endorsement of government, and for businesses to adoptit.

The drafting of the Code had been achieved through the work of a multi-stakeholderSteering Committee87 and Task Force.88 The stated purpose of this drafting exercise wasto describe a Code of Conduct to be observed by institutions, organisations and com-

panies operating in Malawi in order to ensure that they do not engage in corrupt

practices.

89

Adoption of the Code was intended to be a strategic decision for anorganisation, with specific design and implementation of the Code being influenced by varying needs, particular objectives, the products or services provided, the processesemployed and the size and structure of the organisation. 90 It was intended that theCode be used by internal and external parties to assess the organisations performance incombating corruption. By September 2006, the Business Code of Conduct had been

completed and was awaiting approval and adoption by the government of Malawi, as wellas widespread adoption and implementation by Malawian businesses and otherorganizations.

At that time independent researchers commissioned by the UN Global Compactconducted a survey of members of the Steering Committee and Task Force to gathertheir views on the progress of the anti-corruption initiative. The survey posed questionsabout developments in implementing the initiatives goals and action plan, to ascertain

87 The Steering Committee was led by Sean de Cleene of the AICC, and comprised of the AICC - AfricanCorporate Sustainability Forum, the Malawi Anti-Corruption Bureau, Chemicals and Marketing Co Ltd., MalawiBureau of Standards, Malawi UN Global Compact, Rab Processors Limited, United States Agency forInternational Development (USAID), and Yara Malawi (PVT) Limited.88 In addition to the members of the Code Steering Committee, the Malawi Business Action Against CorruptionTask Force currently includes Africa Leaf, Illovo Sugar (Malawi) Ltd., Limbe Leaf Tobacco Company Ltd., MalawiRevenue Authority, Malswitch Reserve Bank of Malawi, the Ministry of Trade and Private Sector Development,the Office of the Director of Public Procurement, Multichoice Malawi, Press Corporation Limited, SafetechMalawi, Dimon (Malawi) Ltd., MSC Malawi, Africa on Line, Press Corporation Limited, Press Trust, Chemical andMarketing Malawi, Air Malawi, Mediterranean Shipping Company, Multi Choice, The Society of Accountants in

Malawi (SOCAM), and United Nations Development Programme (UNDP).89 Business Code of Conduct for Combating Corruption in Malawi (August 2006), Foreword, p.3.90 Business Code of Conduct for Combating Corruption in Malawi (August 2006), Foreword, p.3.


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whether the multi-stakeholder process was bringing about cross-societal progress infighting corruption. The survey results (See Appendix VI.) and the researchersconclusions and recommendations were sent to Sean and Daisy in late October. Theresults of the survey had been overwhelmingly positive, confirming that there was a

continuing shared commitment in government, the business sector and civil society towork together to eradicate corruption. Respondents seemed to feel that development ofthe core document, the Business Code of Conduct, had been an appropriate first majorproject and that it had gone well, although important questions about the Codes futurewere outstanding. Many thought that progress had been somewhat slow andacknowledged the difficulty in contributing effectively to the initiative while balancingtheir other work pressures.

Respondents recognized that the next big challenge would be in obtaining widespreadadoption and implementation of the Code. They had many ideas about how to publicizethe Code and ensure buy-in. Responses to some questions indicating lack of knowledge

about what other participants were doing suggested that ongoing communication

between the various engaged sectors of society business corporations, governmentagencies, the media, and civil society could be enhanced. Some responses urging

greater publicity raised the possibility of expanding the multi-stakeholder negotiationprocess beyond business, government and civil society leaders to engage a broaderswath of Malawian society. This suggested that public consultation would be useful toraise awareness and increase nationwide support for the initiative although care would

need to be taken to keep the multi-stakeholder negotiation process manageable andeffective.

Respondents uncertainty about the infrastructure of the Anti-corruption Initiative and thespecifics of its future work plan suggested that this might be a good time for the leadersto regroup and map out the next steps and set up the appropriate structures for the next

phases of implementation. This would likely involve considering establishing theindependent agency that will promote, and assist in measuring, compliance with theCode. Funding for such an agency would also need to be negotiated.

The researchers noted that the Malawi Leaders Forum provided an excellent illustrationof the use of a consensual approach in resolving public crisis although it was still earlydays to judge whether it would achieve its laudable objective of eradicating corruption.91

For an issue of such magnitude and complexity, the commitment to the consensualnegotiation process had to be long term. The roundtables, the Leaders Forum, and eventhe development of an initial action plan were only the beginning, with extensive mutualcommitments being forged, long term relationships deepening, and substantial

investment in implementation to continue into the foreseeable future. The fact that one

year later, the Initiative had successfully crafted a Business Code of Conduct to guide allsectors, and that participants still were deeply committed boded well for the longer term

survival of the initiative. The Malawi Leaders Forum had inspired a nation to action; 92 itschallenge now was not to lose momentum for the great task still ahead. By staying trueto the principles of multi-stakeholder negotiation processes, this initiative could nurtureongoing involvement and participation, and continue to broaden the reach and deepenthe roots of the anti-corruption movement in Malawi. A final observation by theresearchers was that periodic surveying of participants over the long-term of thisInitiative might be a useful way to verify that the Initiative continued on track and tofacilitate mid-course corrections if needed.

91 L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes

(1987. Basic Books).92 [W]hat the private sector has done has even motivated civil society to engage on the issue as well. DaisyKambalame (AICC).


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The Challenge Ahead

Sean and Daisy were relieved by with the survey results, which they had anticipated with

some trepidation. They understood that it was too soon to say with certainty that theanti-corruption initiative was having an enduring impact locally, in civil society, at thefirm level, at the professional association level, and within government. Nonetheless,

they were heartened to see that participants in the initiative felt that even though muchremained to be done, Malawi had never been closer to coming to grips with the challengeof corruption. The UN Global Compact identified three key conditions for successfullycombating corruption: High level commitment from the most senior echelons of

Government; Investment in the building of corruption prevention infrastructure;Implementation and management of such infrastructure with the aim of affecting ethicalculture change.93 Sean and Daisy knew that by creating a broad-based anti-corruptioncoalition these conditions were beginning to take hold in Malawi. It was gratifying toconfirm, that participants felt the initiative was on the right track, and recognized thatsuccessful completion of the Code was a key early deliverable for the initiative.

True, the survey also raised some difficult questions about enlargement, publicinvolvement and creation of a coordination infrastructure. Sean and Daisy had alreadysensed that these needed to be addressed. While they were pleased that the Code wasgradually becoming known and taking root, they were also acutely aware that much ofthe action plan remained to be accomplished and that the initiative urgently needed moreresources, including a clear structure for coordinating and driving the initiative.

The action plan had called for the creation of an independent body that would promote,support and provide peer pressure for a zero tolerance policy on corruption in bigbusiness, state enterprise and government procurement. Sean was sure that it was timeto establish this independent body, or risk losing significant momentum. The difficulty

was to determine how to structure it, fund it and ensure its long term leadership andsurvival. He knew who the key players were in civil society, the business community,the media, the government, and the legal profession - but wondered if he could get themto commit to such a long term project, and he worried that short term political pressures

or business interests might hijack a long term national plan. He wondered what each ofhis contacts in business, the media, government, the NGO and donor community, wouldbe prepared to contribute to this initiative and what they would do to ensure it would be

a success both for their own organization and for Malawi.

Sean and Daisy had discussed these questions at length, but they had not reached firmconclusions on how structure might help ensure participants ongoing commitment to the

initiative. With positive survey results behind them, however, they now felt confident

they would have good support from their partners in finding the right solutions to theseissues. Still, he couldnt help feeling some anxiety as he waited for word that the

government would endorse the Code. Was it time, he wondered, to call once more on hismost powerful allies to advocate for the Codes adoption?

93

Business Against Corruption: Case Studies and Examples. Implementation of the 10

th

United Nations GlobalCompact Principle against Corruption, The Global Compact (April 2006), Case Study: Eastern Cape at page177.


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R. Lewicki et al., Negotiation (4th ed. Chapter 13 Managing Difficult Negotiations: ThirdParty Approaches 463-498).

T. Williams, Negotiation and Conflict Management(2006, Queens University BusinessSchool course materials).

A.J. Wills,An Introduction to the History of Central Africa: Zambia, Malawi, andZimbabwe (1985, 4th ed. Oxford University Press).

D. Ertel, Getting Past Yes: Negotiating as if Implementation Mattered(November 2004)

Harvard Business Review 60.


United Nations Global Compact Principle against Corruption, The Global Compact (April2006).

Guidance Document: Implementation of the 10th principle against Corruption, The Global

Compact (December 2004).

J. Breeze, Corruption: Sharing What Works, Prince of Wales International Business

Leaders Forum (2002).


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Appendix I. Integrative Multi-Stakeholder Negotiation Defined

Variously called cooperative, collaborative, win-win, mutual gains or problem-solving

negotiation, integrative negotiation is well-suited to a problem like corruption wherethere are many parties across the spectrum of society implicated in its continued practiceand needing to make mutually binding pacts to eliminate corrupt practices in the

future.94

Unlike distributive negotiation, where each side seeks through the negotiation process togain for him or herself the largest piece of a fixed pie, in integrative negotiation, each

side understands that through negotiation it may be possible for all sides to gain muchmore than the original pie. Integrative negotiation differs from distributive bargainingbecause it focuses on commonality not difference, attempts to address needs andinterests not positions, it requires a free flow of information and ideas, participantscommit to meeting the needs of all involved parties, parties invent options for mutualgain and use objective criteria for measuring implementation of the negotiatedagreement.95 Bargaining from positions is ineffective when there are many interested

parties and it tends to lead to dysfunctional and unsatisfactory negotiation results. Byfocusing on interests not values, numerous solutions reveal themselves as possible.96

Lewicki et al. identify the key steps in the integrative negotiation process as being:

1. identify and define the problem jointly,

2. understand the interests and needs that underlie the problem,

3. generate alternative solutions by refocusing questions to reveal win-win options,and

4. carefully evaluate and select from a range of alternatives to produce final

agreement in which the needs are integrated.97

Consensual negotiation are characterized by voluntary and face-to-face participation(possibly facilitated),98 with representation specially chosen to build long-termrelationships, sharing of the costs of the process as a stake in the process and long terminvestment, participants setting the ground rules collectively, seeking out mutual gains

and voluntarily accepting the resulting action plan.99 Significant procedural andsubstantive benefits can be derived from consensual negotiation. First, it produces a fairand open process, resulting from broad participation and public accountability. Second, it

is efficient, with the full range of issues and perspectives being brought into thediscussion and used in finding solutions, leading to collective buy-in for implementation.Third, decisions reached through consensual negotiation are characterized by wisdom

94 R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin) at 95-119.95 R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin) at 95.96 Interests are needs, desires, concerns, or fears the things one cares about or wants. They underliepeoples positions the tangible items they say they want. In contrast, values are closely tied to identity andfeelings of self-worth such that they are far less amenable to negotiation and compromise: L. Susskind and P.Field, Dealing with an Angry Public: the Mutual Gains Approach to Resolving Disputes (1996. The Free Press) at154, citing W. Ury, J. Brett and S. Goldberg, Getting Disputes Resolved (Cambridge Mass. 1993).97 R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin) at 98-113; T. Williams, Negotiation and Conflict Management (2006, Queens University Business School coursematerials), Session 2 at 5.98 Consensual negotiation may be unassisted or assisted by a third party. The latter can involve differentapproaches e.g., facilitation, mediation and non-binding arbitration.99 L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes(1987. Basic Books) at 78.


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and foresight, having benefited from a broad range of insights and experience, andcollaborative inquiry to develop shared understanding. Fourth agreements resulting fromconsensual negotiation are stable, due to the emphasis on feasibility, realistic timetables,reciprocal achievable commitments, flexibility to adjust as new facts or circumstances

come to light, and investment in longer term relationships.100

In order to help a complex multi-stakeholder negotiation make the transition fromsuccessful deal-making to successful implementation participants should

1. start with the end in mind,

2. help the other parties to prepare for implementation,

3. treat alignment as a shared responsibility because failure affects all parties,

4. send a common message,

5. manage the negotiation like a business process requiring preparation and post-

negotiation evaluation.

101

Appendix II.

Prince of Wales International Business Leaders Forum, Janet Breeze, Corruption:Sharing What Works(2002) page 10.

100 L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes(1987. Basic Books) at 21-33.

101 D. Ertel, Getting Past Yes: Negotiating as if Implementation Mattered (November 2004) Harvard BusinessReview 60 at 63.


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Appendix III. Issues identified in the Final Report of the MalawiLeaders Forum on Building Alliances to Eliminate Corruption(7 June 2005)

There is a distinct need to review Malawis broader values and ethics systems toidentify the areas where the private sector can have influence. As people spend a lot

of their time at work, this provides a clear opportunity for using the workplace todevelop strong awareness of the eroding effect of corruption and promote widersocietal values that actively fight against corrupt practices throughout society.

Ongoing political will to push anti-corruption strategies down through the variousgovernment systems is vital

It was felt that a comprehensive review of the judicial system would be highlybeneficial currently the law society was perceived as having no teeth when it came

to de barring or investigating anyone within the system who obviously had beenguilty or suspected of corrupt practice

There is a need for increased peer review mechanisms both within a given sector

and between sectors.

The initiating of an independent body to build value around or create an incentivesystem for a zero tolerance policy on corruption, particularly as it related to thesupply chain of larger companies, state enterprise and government procurement. Toremain depoliticised this needs to be focussed on defining and monitoring systemsthat are deemed appropriate in addressing issues of corruption, rather than makingassessments on corrupt practice itself. This could include the application of ascorecard or rating model that companies would agree to respect in terms of

obtaining or providing goods or services. The Nigerian Convention on Corruptionmodel was highlighted as a potential model if appropriate in the Malawian context.

This body could also be used to train and act as a think tank on corruption-related

issues.

There was a strong call for more ongoing dialogue between private sector, donorsand the various government bodies dealing with corruption whether this is throughthe National Action Group or Forums such as this one.

Significant increase: in Institutional capacity building staffing, upskilling, andremuneration of bodies such as the Anti Corruption Bureau (ACB).

Development of a common set of standards to regulate the conduct for both public

and private business. Government should participate in the setting of thesestandards to highlight where government measures or legislation on a particular

point are already in place. Provision of a benchmark on acceptable behaviour guidelines on what is

considered acceptable in terms of dinners/ gifts etc. could be used in employeetraining in government and private sector.

There is need to develop a broad-based education and communication process thatthe private sector would be able to play a key role in.

Possibility of taking forward a campaign-style methodology, where government andbusiness made achievable time bound commitments.

The need for government to target inefficiencies in the system that act to encouragecorruption. Knowing how long an administrative procedure should take (published

standards) and having clear recourse to remedial actionwhen this is not adhered to.It was felt that certain actions should be automatically copied to the ACB, who canlook for spikes in the system and suggest remedial actions.


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ACB is seen as working but there was a feeling that the ACB is not necessarilysufficiently empowered to handle all relevant issues as they related to the widercauses of corruption. Is there a mechanism where a coalition of stakeholders couldactively provide support to ensure its future sustainability? Stakeholders should also

potentially have more input into the governance of ACB.

There is a clear need to explore models that are working elsewhere. The NigerianConvention on Corruption was highlighted as an example, which might serve to

inform the establishment of an independent corruption reporting committee forMalawi.

Appendix IV. Nigerian Convention on Business Integrity

Formally launched in Lagos on 2 October 1997, the Convention promotes ethical conduct

in business, as well as competence, transparency, accountability, and a commitment todoing what is right, just, and fair. Its member organizations include Integrity;

Transparency in Nigeria, a national chapter of Transparency International; and numerouslocal and multinational businesses.

The principle of membership works in a way analogous to the revolving micro-credit schemes popular in Africa, called ajo, esusu, etc, in some parts of Nigeria.Under these schemes, members contribute equal amounts on a periodic basis, and

the whole pot is given to one member. The rate of default in these schemes isgenerally accepted to be very low because they operate through a mutualaccountability network where sanctions are applied through peer pressure andeach member submits to peer review

It was agreed in the end that whistle-blowers would have to remain anonymousto the company or persons involved.

The process begins by presenting allegations of questionable practices to a coregroup of signatories. If the whistle-blowers claims are substantiated, the core

group then approaches the company in question. Such companies have aresponsibility to deal with the issues as well as they can internally and for thispurpose they need to appoint an ethics counsellor:

The intending signatory must appoint an Ethics Counsellor to counsel with thosewishing to resolve ethical dilemmas, and those seeking clarification of ethicalvalues, or core values of the organization. He or she will counsel in confidencewith those wishing to report unethical and corrupt practices taking place withintheir organization and take appropriate action. An Ethics Counsellor must be amember of senior management that enjoys the trust and confidence of bothmanagement and employees. He or she must have a good knowledge of

organizational processes and the core values of the organization. He or she shallalso monitor organization compliance with this Code of Business Integrity.In 2004, the Ministry of the Federal Capital Territory (MFCT), the seat of thefederal Government of Nigeria, decided to sign on to the Convention as a pilot forthe public sector.


United Nations Global Compact Principle against Corruption, The Global Compact (April2006), Case Study on the Convention on Business Integrity at 143-144.


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Appendix V. Business Code of Conduct for Combating Corruption inMalawi (August 2006)

INTRODUCTIONThe Business Code of Conduct for Combating Corruption in Malawi has been developed

by a multisector steering committee that forms part of a wider Malawi Business ActionAgainst Corruption Taskforce. The Code has been developed, through private sectorinitiative, as a tool to assist organisations to develop effective actions in combating

corruption in all its forms.

The Code of Conduct draws on various international initiatives, in particular:

Business Principles for Countering Bribery, an initiative of TransparencyInternational and Social Accountability International,

Business Action Against Corruption a flagship pan-African governance programmeunder Business Action for Africa which was set up at the G8 Summit to promote

support for Africas development. The BAAC is currently managed in partnership bythe AICC African Corporate Sustainability Forum (ACSF), Commonwealth BusinessCouncil (CBC) and SADC Southern African Forum Against Corruption (SAFAC), whichincludes the regions anti-corruption commissions, the Human Rights Trust ofSouthern African (SAHRIT) and the Nigerian based Convention on Business

Integrity.

but also includes other initiatives such as:

African Union Convention on Corruption.

Organization for Economic Cooperation and Development (OECD) Convention on

Combating Bribery,

International Chamber of Commerce (ICC) Rules of Conduct to Combat Extortionand Bribery,

Interpol Global Standards to Combat Corruption,

United Nations Convention on Corruption

SCOPE

General

This code provides a framework for good business practices and risk managementstrategies for countering corruption. It is aimed at assisting organisations to:

eliminate corrupt practices;

demonstrate their commitment to countering corruption; and

make a positive contribution to improving business standards.

Application

Though the code is specifically designed for use in large and smallpublic and private companies, the requirements contained herein arein themselves generic and are intended to be applicable to allorganisations, regardless of type, size and product/service provided,that wish to demonstrate their ability to combat corruption.


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DEFINITIONS

Corrupt practices include: bribery, fraud, theft, abuse of position or authority,embezzlement, extortion, influence peddling; facilitation payments

Bribery: promising, offering, giving or soliciting of any benefit in cash or in kind thatimproperly affects the actions or decisions of any person.

Fraud: false representation or concealment of material facts in order to part with

something of value

Abuse of position or authority: Use of ones vested authority to improperly benefitoneself or an entity or another person

Embezzlement: This involves theft of resources by persons entrusted with the

authority and control of such resources

Extortion: This involves coercing a person or entity to provide a benefit to himself,another person or an entity in exchange for acting (or not acting) in a particularmanner.

Influence peddling: The practice of using ones influence with persons in authority toobtain favours or preferential treatment for another, usually in return for payment.

Facilitation payment: These are small payments made to secure or expedite the

performance of a routine or necessary action to which the payer of the facilitationpayment has legal or other entitlement. Also called facilitating, speed or

grease.

CORRUPT PRACTICES

Corrupt practices include:

Behaviour that involves any of the following: bribery, fraud, theft, misuse of

position or authority, embezzlement, extortion, influence peddling or the providingof facilitation payments;

The offering, giving, receiving, obtaining or soliciting of any advantage to influence

the action of any public officer or any official or any other person in the discharge ofthe duties of that public officer, official or other person;

The offering, giving, acceptance or soliciting of a bribe in any form or the use ofother routes or channels for the benefit of an employee or that of the employees

family, friends, associates or acquaintances;

The abuse of entrusted power for private gain or any conduct or behaviour in

relation to persons entrusted with responsibilities which violates their duties andwhich is aimed at obtaining undue advantage of any kind for themselves or forothers;

The unauthorized dissemination or solicitation of confidential or restrictedinformation for reward

PRINCIPLES FOR COMBATING CORRUPTION

The enterprise should prohibit corrupt practices in any form whether direct or

indirect.

The enterprise should commit to the fundamental values of integrity, transparencyand accountability.


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The enterprise should aim to create and maintain a trust-based and inclusiveinternal culture in which corruption is not tolerated.

The enterprise shall commit to implementation of a programme to counter

corruption.

REQUIREMENTS

Development of a programme for combating corruption

An organisation, institution or company should develop a programme reflecting itssize, business sector, potential risks and locations of operation, which should,clearly and in reasonable detail, articulate values, policies and procedures to be

used to prevent corruption from occurring in all activities under its effective control.

The programme should be consistent with all laws relevant to countering corruptionin all the jurisdictions in which the organisation or company operates.

Standards of conductEach organisation, institution or company should be committed to following practices asthey relate to corrupt practices, and should put measures in place to

prohibit corrupt practices by any employee, agent, or any other person under the

employment or authority of the enterprise;

make corruption by an employee subject to severe disciplinary measures;

establish a system for the recruitment of employees who are of high integrity, andsystems for promotion and termination that are not arbitrary but based on fairness,

openness, ability and performance;

provide adequate safeguards to prevent abuse of powers by those engaged in the

anti-corruption system and to minimize unnecessary infringements of individualrights;

establish systems for the procurement of goods and services that are based onopenness, efficiency, equity and certainty of the rules to be applied and that seekthe best value for money;

set up and maintain effective mechanisms to oversee and detect failures to meetstandards and enforce the high standards of conduct required;

train its employees to understand and practice honest, ethical and appropriatebehaviour, to avoid conflicts of interest, and to report acts of corruption;

require the reporting of all known instances of corruption to the relevant

authorities; require public disclosure of all its political or charitable contributions, or

sponsorships;

protect employees from repercussions for reporting corruption.


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Specific programme requirements

In developing the programme for countering corruption, an organisation, institution orcompany should analyse which specific areas pose the greatest risk from corruption. The

programme should address the most prevalent forms of corruption relevant to theorganisation, institution or company, but to a minimum should cover the following areas:

Bribes

The organisation, institution or company should prohibit the offer or acceptance ofa bribe in any form or the use of other routes or channels to provide improperbenefits to customers, agents, contractors, suppliers or employees of any suchparty or government officials.

The organisation, institution or company should prohibit an employee fromarranging or accepting a bribe from customers, agents, contractors, suppliers,or employees of any such party or from government officials, for the employeesbenefit or that of the employees family, friends, associates or acquaintances.

Political contributions

The organisation, institution or company, its employees or agents should notmake direct or indirect contributions to political parties, organisations or

individuals engaged in politics, as a way of obtaining advantage in businesstransactions.

The organisation, institution or company should publicly disclose all its politicalcontributions.

Charitable contributions and sponsorships

The organisation, institution or company should ensure that charitable

contributions and sponsorships are not being used as a subterfuge forcorruption.

The organisation, institution or company should publicly disclose all its charitablecontributions or sponsorships.

Facilitation payments

Recognising that facilitation payments are a form of bribery, the organisation,institution or company should work to identify and eliminate them. Facilitationpayments are payments made to secure or expedite the performance of aroutine or necessary action to which the payer of the facilitation payment haslegal or other entitlement.

Gifts, hospitality and expenses

The organisation, institution or company needs to have a publicly available policy

on what constitutes appropriate behaviour in relation to gifts hospitality andexpenses. This policy should prohibit the offer or receipt of gifts, hospitality orexpenses whenever such arrangements could affect the outcome of businesstransactions and are not reasonable and bona fide expenditures.


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IMPLEMENTATION REQUIREMENTS

The organisation, institution or company should meet the following minimum

requirements when implementing the programme:Board and management responsibilities

The Board of Directors or equivalent of the organisation, institution or companyshould base their policy on this code of conduct and provide leadership,

resources and active support for implementation of the programme.

The Chief Executive Officer is responsible for ensuring that the Programme iscarried out consistently with clear lines of authority.

The Board of Directors, Chief Executive Officer and senior management should

demonstrate visible and active commitment to the implementation of this code.

The Board of Directors or CEO should oversee that all management and ifappropriate all staff members should sign an individual contract of agreement to

abide by the policy as set out by the company.

A structure will be established that provides for regular reporting to seniormanagement and the board on the nature and magnitude of exposure to corruptpractices and an assurance to the board, and its audit committee in particular,

that procedures to follow the principles as laid down in this code are in place andbeing properly applied at all times. Internal reporting of actual corrupt practicesshould remain transitional subsequent to reporting to the appropriate authority.

That the Board and/or its audit committee reviews the mandate and actions

undertaken by both the internal and external auditors, with particular referenceto issues outlined within this code, and undertake any corrective action deemednecessary to ensure progress towards fully adhering to the principles laid down

in the code. Any significant concerns would also be reported to the full board.

That each director (both executive and non-executive) submit signed attestations,in a public disclosure statement to the effect they are fully satisfied that all theorganisations anti-corrupt practices are being followed, monitored and managed

appropriately in accordance with the code and that procedures are in place toachieve this.

Business relationships

The enterprise should apply its programme in its dealings with subsidiaries, joint

venture partners, agents, contractors and other third parties with whom it has businessrelationships.

Subsidiaries and joint ventures:

The organisation, institution or company should conduct due diligence beforeentering into a joint venture.

The organisation, institution or company should ensure that subsidiaries and jointventures over which it maintains effective control adopt its programme. Where

an organisation institution or company does not have effective control it shouldmake known its programme and use its best efforts to monitor that the conductof such subsidiaries and joint ventures is consistent with the code.

Agents:The organisation or company should not channel improper payments through anagent.

The organisation institution or company should undertake due diligence before

appointing an agent.

Compensation paid to agents should be appropriate and justifiable remunerationfor legitimate services rendered.

The relationship should be documented.


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The agent should contractually agree to comply with the enterprises policy oncorrupt practices.

The organisation, institution or company should monitor the conduct of its agentsand should have a right of termination in the event that they pay bribes.

Contractors and suppliers:

The organisation institution or company should conduct its procurement practicesin a fair and transparent manner.

The organisation institution or company should undertake due diligence inevaluating major prospective contractors and suppliers to ensure that they haveeffective anti-bribery policies.

The organisation institution or company should make known its anti-bribery

policies to contractors and suppliers. It should monitor the conduct of majorcontractors and suppliers and should have a right of termination in the eventthat they pay bribes.

The enterprise should avoid dealing with prospective contractors and suppliers

known to be paying bribes.

Human resources

Recruitment, promotion, training, performance evaluation and recognition shouldreflect the organisation institution or company commitment to the programme.

The organisation institution or company should make it clear that no employeewill suffer demotion, penalty, or other adverse consequences for refusing to paybribes even if it may result in the organisation institution or company losingbusiness.

Training

Managers, employees and agents should receive specific training on the

programme, which should include integrity training and principle based training.

Where appropriate, contractors and suppliers should receive training on theprogramme.

Raising concerns and seeking guidance

To be effective, the programme should rely on employees and others to raiseconcerns and violations as early as possible. To this end, the organisation,institution or company should provide secure and accessible channels throughwhich employees and others should feel able to raise concerns and reportviolations (whistle-blowing) in confidence and without risk of reprisal.

These channels should also be available for employees and others to seekadvice or suggest improvements to the programme. To support this process, the

organisation institution or company should provide guidance to employees andothers with respect to the interpretation of the programme in individual cases.

Communication

The organisation institution or company should establish effective internal and

external communication of the programme.

The organisation institution or company should, on request, publicly disclose themanagement systems it employs in countering corruption and bribery.

The organisation institution or company should be open to receivingcommunications from relevant interested parties with respect to theprogramme.

Internal controls and audit


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The organisation, institution or company should maintain accurate books andrecords, available for inspection, which properly and fairly document allfinancial transactions. The enterprise should not maintain off-the-booksaccounts.

The enterprise should establish feedback mechanisms and other internalprocesses supporting the continuous improvement of the programme.

The organisation institution or company should subject the internal control

systems, in particular the accounting and record keeping practices, to regularaudits to provide assurance that they are effective in countering bribery.

Monitoring and review

Management of the enterprise should monitor the programme and periodically

review the Programmes suitability, adequacy and effectiveness and implementimprovements as appropriate. They should periodically report to the Board ofDirectors or shareholders, or any such appropriate body, the results of the

programme review. The Board of Directors, shareholders, or any such appropriate body should

make an independent assessment of the organisation, institution or companyregarding the adequacy of the programme and make its recommendations.

CRITERIA FOR COMPLIANCE

Organisations wishing to demonstrate their compliance to therequirements of this code shall be voluntarily audited and rated on thelevel of compliance to this code. Such a rating system is currently beingdeveloped in Malawi and ratings will be determined by identifying process,

mechanisms and practices within the organisation that enable it to complywith the requirements of the code and ensure that corrupt practices, asfar as can be ascertained, are not taking place within the organisation.


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Appendix VI.Consolidated Results of the Survey of ParticipantsMalawi Business Action Against Corruption

In-person interviews were conducted and documented by an independent researchteam.102 Not all organizations contacted responded, and not all those that did respondanswered every question. The following is a consolidation of the responses received,without attribution or weighting of specific comments. The accuracy of the content ofstatements made by respondents was not verified. The statements are reproduced in

summary form here to indicate participants personal impressions of the Initiative. Giventhe small sample size and nature of the questionnaire, the consolidated results areoffered not as statistically significant indicators of opinion in Malawi but as informedimpressions of the Anti-corruption Initiative at this particular point in time (October2006). As such, the consolidated results provide some insights about the current state ofthe initiative as well as suggestions that may help guide it in the future.

Participants were asked to what extent their organization had been involved in theinitiative recently undertaken by the business community in the fight against corruptionin Malawi. The trend of responses was to cite the Business Leaders Forum and theinvolvement of most respondents in the Task Force developing the Business Code of

Conduct. In addition, two multinational companies cited their own risk managementprogrammes targeting corruption eradication within their companies through anti-fraudpolicies and anonymous tip-offs.

The survey asked participants what input or assistance they had provided. Somerespondents who had been involved in the Task Force indicated they had contributedtoward the initiative by alerting their staff of the need to be vigilant against corrupt

practices. One respondent mentioned contributing to the direction, focus and mobilizationof members of the Task Force. Government participants had kept the Task Force up todate on developments within government in the fight against corruption. Additionally,comments were made on the draft Code of Conduct now awaiting adoption by the

government. One respondent cited a document which had been sourced from Sweden(Swedish International Development Cooperation Agency) which had proved useful indrafting of the Code of Conduct in reader-friendly language.

Participants were asked for their opinion as to what were the major challenges facing theinitiative. The challenges cited in response were: the fact that corruption was rampantand entrenched, such that reversal would be an uphill task; lack of punitive measurestargeting offenders; the fact that participation is voluntary; integrating all sectors in theInitiative and having the general business sector accept the outcome of the Initiative;

having the government endorse the Code of Conduct; and having a Business Conductrating system accepted and enforced; and meeting the high expectations of Malawian

society.

They were asked what in their opinion are the strengths and weaknesses of the Initiative.Strengths that were mentioned by respondents were: the Presidents presence at theinaugural Leaders Forum and his governments commitment to the Initiative, coupledwith high level support from business leaders; the enthusiasm and cooperation ofmembers of the Task Force was noted by several respondents; that some in the private

sector were already championing the cause by setting up anti-corruption systems withoutwaiting for the results of the Task Force Code; and that there was broad support and nonegativity towards the Initiative. The weaknesses that respondents identified were the

102 Interviews were conducted by co-author Dr. James Ngombe with the assistance of Vales Machila, Dip Ed, DipJournalism.


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following: lack of expertise in the anti-corruption drive among the members of TaskForce; corruption entrenched in the country (one respondent mentioned the bestintentions of the Leaders Forum are hampered by continued corruption in high office,poor support from the judiciary, difficulty in prosecuting cases, and delays in amending

laws); there are no punitive measures for non compliance; progress towards theadoption of the Code is slow; members of the Task Force are committed to other equallypressing engagements and thus are unable to provide sufficient support and input to theInitiative; and the need for more resources to be able to push the Initiative forward.When asked about the constraints facing the initiative, respondents provided similaranswers to the preceding question. An additional constraint that was identified was thelack of drafting expertise for the Code project. Another commented that there was no

indication of negativity towards the Initiative.

The questionnaire asked how participants hoped to assist in the furtherance of theInitiative. Some respondents answered that they would lead by example, by introducing

zero tolerance to corruption in their respective organizations and introducing senior

managers to the Initiative. Respondents uniformly expressed willingness and a desire tocontinue to assist in the implementation stage although some noted there were other

constraints on their time.

Asked if the Malawi anti-corruption Initiative was something they would recommend tobe replicated elsewhere on the globe, respondents were unanimous in saying they would.

One multinational business representative said they would push for a similar approach inother countries in which they do business.

Participants were asked whether the preliminary action plan developed at the LeadersForum had been broken down into manageable tasks, and if so, whether there was now adetailed action plan with responsibilities assigned, timeliness, reporting and

accountability. Responses varied, with some respondents saying no, others saying yes, or yes but it is taking time because everyone involved is busy. Respondentsclearly saw the drafting of the Business Code of Conduct as a key step in implementingthe action plan. One respondent suggested that the next course of action could only bedetermined after the Code had been accepted and adopted by the government. Anothersuggested that the Code should be launched publicly to encourage companies to sign on.Other respondents commented that the Code has not been given enough publicity; thatcompanies now need to sign onto the Code and implement it in their organizations; and

that the Code will need some refinement as adoption and implementation proceed andthat publicizing it in the media would be useful to generate informed discussion.

The survey asked whether there is a coordinated accountability mechanism to ensure all

parties live up to their commitments. Respondents answered that so far the members ofthe Task Force have remained on course, coordinating well, and demonstrating theirongoing commitment. It was noted that it will take committed leadership to drive the

initiative forward. Several respondents observed that individually some organizationshave designed and implemented their own anti-corruption programmes as part of riskmanagement.

Respondents were asked whether there is a leaders coalition responsible for ensuringthat the integrative negotiations continue, and stay on track over the long term. Theresponses varied with some saying yes, the leaders were chosen at the launch of theForum, and others saying no or not yet. One respondent questioned if the Task Forcewas the right vehicle to carry the message and deliver the anti-corruption initiative.

Another indicated that the future role of the Task Force had not yet been decided,beyond completing the drafting of the Business Code of Conduct. A government


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respondent noted the crucial role played by the African Institute for Corporate Citizenshipin this Initiative.

A subject of some discussion at the Leaders Forum was the creation of an independent

advisory body. Participants were asked whether such an independent advisory body hadbeen more fully defined and established, and if so, what is the membership and what areits functions. Respondents noted that this idea had not yet been acted upon. The TaskForce had been mandated to draw up the Business Code and recommend it for adoptionboth to the Leaders Forum and the government. Most respondents were of the view thisindependent body had not yet been established and that the Initiative was still looking atother comparative models and working on designing the way forward.

The questionnaire asked whether international organizations, donor organizations andforeign governments are involved effectively to support the anti-corruption effort. Onerespondent thought that so far, the initiative was free of governments (financial) support

and wondered, if government funded the initiative, whether it would lose its

independence. Another respondent noted government had provided some financialsupport for the initiative. Another thought the donor community was a little distant from

the initiative and could do more by offering debt relief, to allow government to payemployees adequately and thereby prevent corrupt practices. It was mentioned thatUSAID, UNDP, SIDA-Norad, and the World Bank are currently assisting the Office of theDirector of Public Procurement. Another respondent commented that the donor

community was interested in, indeed keen about, the anti-corruption Initiative, and thatthere was a possibility of obtaining funding from them if the government endorsed theCode of Conduct.

Participants were asked what steps are being taken to entrench change, so that theinitiative survives changes of leadership in various organizations and sectors. One

respondent thought that this was an issue that had not yet been decided. Anotherrespondent felt that not enough had been done within his organization: managers wereaware of the anti-corruption initiative, but more could be done to implement anti-corruption measures. Some respondents commented that the initiative was only slowlytaking root but that corrupt practices were rampant (corruption in family businesses andstatutory bodies offering essential services such as water, electricity and telephones wasmentioned by one respondent). Respondents also observed that civil society groups areforming to assist in creating awareness and initiate action and that there was hope that

practices in government institutions would be improving.

The survey asked whether best practices from other contexts such as integrity pacts orbusiness integrity conventions have been adopted, and if so, whether they work well in

these contexts. Respondents mentioned that the Code of Conduct was developed withreference to existing codes and best practices from Malawi, Africa and the internationalcommunity. A government respondent said he was not aware of related developments in

the private sector. It was suggested by one respondent that the starting point forcombating corruption in business was the need for effective risk management.Respondents cited three examples where local programmes have been developed withoutwaiting for the Code to be launched, and which were going well: SIDA (Swedish

International Development Cooperation Agency) Anti-corruption Programme; UnileverAnti-corruption Programme; and Illovo Risk Management (Illovos anonymous tip-offsystem for employees, customers and suppliers, administered by Deloitte-Touche).

The questionnaire noted that one key problem identified at the Leaders Forum was weak

capacity in government and asked whether the causes of this problem had beenidentified. Some respondents considered that the problems had been identified and were

being addressed by the various government organs such as the Anti-Corruption Bureau;


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case study Malawi

while others thought the problems were still being identified. Some respondentsremarked that there were some noticeable efforts but that it would take time to haveimpact. It was noted that the government has assisted the Initiative up to this point, butcould do more, as could the Malawi business sector. One respondent expressed concern

that the courts might not be helpful in fighting corruption.

This question continued by asking if any of six listed points were causes of lack ofcapacity in government: lack of adequate training; inadequate salaries; lack of a code ofethics; defects in the reward systems; and lack of independence of public servants.Responses varied considerably, some respondents had difficulty identifying the causes,but each of the listed points was identified by at least one respondent as an underlying

problem. A further question asked whether any steps have been taken to address theproblems noted above. The answers varied. A government respondent indicatedmeasures were being taken to address identified weaknesses in training, ethics codesand independence of public servants; private sector respondents were less aware of

these developments. All respondents thought the programme would need time to work.

The survey asked whether the Initiative against Corruption was being effectively

publicized, and if so, who was responsible for the production and management of thecampaign. The response was negative, with several respondents suggesting that morecould be done to publicize the Code in the media, get public attention and engage thepublic, attract comments and demonstrate transparency. There was also a question as

to whether there were anti-corruption train-the-trainer programmes for the work place,and if so, whether these programme were supported by business or other sectors. Theresponse was that they do not exist yet, but that this would likely be part of supporting

implementation of the Code. It was also noted that some businesses have shownleadership by adopting and supporting anti-corruption practices in their operations.

A further question asked whether there were sanctions against corruption built intocontracts, and if so, whether they were enforceable. A respondent commented that incompanies that have adopted anti-corruption codes enforcement is through managementcommitment and good business management practices, and these are working well.There was also a question as to whether the prosecution function was independent andinsulated from the possibility of political influence. Some respondents said yes, otherssaid no, with one respondent mentioning the Kadwa case, concerns about the DPP andACB, and risk of political interference. Finally there was a question as to whatsteps are

being taken to target the next generation through ethics training for teachers so they canteach ethics in schools. Responses suggested that education in support of the anti-corruption initiative was a good idea, to be considered seriously. One respondent thoughtthat employees who sign the Business Code of Conduct would be likely to pass it on to

the next generation. Another commented that the Business Code needs more publicity.

Malawi Business Action Against Corruption

Documents

Transcript of Malawi Business Action Against Corruption